Imperialism and the Highest Stage of Capitalism

In 1916 in the midst of the First World War Lenin produced a Marxist masterpiece, entitled “Imperialism, the Highest Stage of Capitalism”. With US imperialism extending its domination over the whole of the world, this book is more relevant than ever. Eighty years after Lenin’s death we publish an appraisal of this classic work.

In 1916 in the midst of the First World War Lenin produced a Marxist masterpiece, entitled “Imperialism, the Highest Stage of Capitalism”. Basing himself on the method of Marxism, he analysed the most up-to-date material showing the destruction of “free competition” and the emergence of monopoly capitalism, and with it imperialism. Today, with all the talk of globalisation, as well as the aggressive stance of American imperialism on the world stage, this study of imperialism has enormous relevance to those who want to understand present-day developments.

In the preface written in April 1917, Lenin hoped that the “pamphlet will help the reader to understand the fundamental economic question, that of the economic essence of imperialism, for unless this is studied, it will be impossible to understand and appraise modern war and modern politics.”

Imperialism and colonialism existed long before capitalism. The imperialism of the Roman Empire, founded on slavery, is one of the earliest examples. However, today’s imperialism, in the highest stage of capitalism, is of a qualitatively different character.

The new phase of capitalism is characterised by “the enormous growth of industry and the remarkably rapid concentration of production in ever-larger enterprises”, explained Lenin. Again, “a very important feature of capitalism in its highest stage of development is so-called combination of production, that is to say, the grouping in a single enterprise of different branches of industry...” Today, concentration of production and owners has grown to extraordinary proportions. Giant transnational corporations and trusts, such as Ford, Chrysler, and Microsoft stride the globe in search of markets and cheap labour. Rather than follow the mass production industries of the past (“Fordism”), new techniques and methods have been introduced in the drive to maximise profits. Outsourcing allows companies to concentrate their business activities, while others provide components or services to the “parent” company. However, a tight commercial stranglehold is maintained on the separate “satellite” companies. Lean production has been introduced to stretch the system to the limits, to place pressures on all sectors of production, in the drive to squeeze out every last ounce of surplus value from the labour of the working class. This is management by “stress”, involving team working and other variants of modern “Taylorism”.

“Half a century ago, when Marx was writing Capital, free competition appeared to the overwhelming majority of economists to be a “natural law'”, wrote Lenin. “Official science tried, by a conspiracy of silence, to kill the works of Marx, who by a theoretical and historical analysis of capitalism had proved that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly. Today, monopoly has become a fact.”

Epoch of cut throat competition

For Lenin, the boom at the end of the nineteenth century and the crisis of 1900-03 resulted in a qualitative transformation of the capitalist economy. “Cartels become the foundations of the whole of economic life. Capitalism has been transformed into imperialism.”

This epoch is characterised by cutthroat competition, where predatory monopolies seek to eliminate their rivals, attempting to undermine them and eventually drive them to the wall. This struggle takes on many forms: blocking supplies of raw materials, closing trade outlets, “gentlemen’s agreements” between buyers, price cutting, and squeezing credit. “We see here the monopolists throttling those who do not submit to them, to their yoke, to their dictation”, wrote Lenin.

The boom and slump cycle of capitalism, as well as the periodic financial scandals and property crises also take their toll. “Crises of every kind – economic crises most frequently, but not only these – in their turn increase very considerably the tendency towards concentration and towards monopoly.”

Together with the concentration of industry goes the increasing importance of finance capital. The banks and finance houses, which originally greased the wheels of production, began to fuse with industry, creating a financial oligarchy in the process. It is the epoch of state monopoly finance capital, where the state becomes increasingly entwined with the banks and trusts. The state is nothing more than the executive committee of the ruling class. In the imperialist stage, the struggle begins for the division of the world amongst the imperialist powers and political alliances are created. “Private and state monopolies are interwoven in the epoch of finance capital... both are but separate links in the imperialist struggle between the big monopolists for the division of the world.”

Another feature of imperialism has been the export of capital, and not simply commodities, which grew steadily in importance. “The need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and poverty of the masses) capital cannot find a field for ‘profitable’ investment”, explained Lenin. This lay behind the drive for new markets and fresh fields of investment in the colonies, causing the expansion of the world economy. Modern factories and rail and transport systems were established in more backward areas, such as Russia, where capitalism was grafted on to semi-feudal relations.

Later on, especially after 1945, this changed, with the export of capital being concentrated in the advanced capitalist countries. Capital did not flow to the less developed countries, but foreign investment increased between the developed capitalist powers instead. That was one of the main reasons for the post war upswing. The World Bank Report of 1985 explained “about three quarters of foreign direct investment has gone to industrialised countries on average since 1965.” This process intensified over the previous 20 years. In fact, large sums of capital were squeezed out of the ‘third world’ by the IMF and World Bank and transferred to the major capitalist powers. In the debt crisis of the 1980s, the debtor economies were unable to generate enough exports to repay their loans, resulting in a series of defaults. This crisis soon put these ‘third world’ economies further into the clutches of IMF-dictated “structural adjustment programmes” (austerity programmes), resulting in stagnation, hyper-inflation and destitution.

“Finance capital does not want liberty, it wants domination”, stated Hilferding correctly. American imperialism, the most powerful imperialism on the planet, has been seeking this role for the last 100 years. It wanted the 20th century to become the “American Century” as the 19th was the “British Century”. The imperialist foreign policy of the United States, as in all capitalist countries, is dictated by the needs of the oligarchy (the military-industrial complex) that rules America. For seventy years the US ruling class was desperate first to destroy and later to contain the Soviet Union after 1945. The nationalised planned economy, despite its totalitarian character, was regarded as a deadly threat to capitalism. The Cold War was a period of intense military and diplomatic rivalry between the two incompatible social systems underpinned by the threat of mutual nuclear annihilation.

New World Order

The “New World Order” proclaimed by George Bush senior after 1990 and the collapse of Stalinism, was nothing more than a plan for world domination by the United States. The idea of the “peace dividend” after the collapse of the Berlin Wall has evaporated in the greatest scramble for armaments in history. The US intervened everywhere to build up its spheres of influence in areas formally controlled by the USSR. Thus its intervention in the Balkans, Caucuses and the Middle East, colliding in the process with the strategic interests of Russia, Germany, France and others. The plan for a “New American Century” is nothing short of a strategy for world domination by the new American “Empire”. This is all done in the name of “democracy” and the “war on terror”.

In a revealing article in the Financial Times entitled “The Profit motive goes to war”, the authors graphically explain the imperialist policy of the United States. “The past decade has witnessed a quiet revolution in the way the US projects its power abroad. In the first Gulf war, the ratio of American troops on the ground to private contractors was 50:1. In the 2003 Iraq war, that ratio was 10:1, as it was for the Clinton administration’s interventions in Bosnia and Kosovo. As these figures reflect, key military functions have been out-sourced to private companies; both Democratic and Republican presidents alike have steadily privatised critical aspects of US national security. For a rough sense of the magnitude of this shift, Halliburton’s total contracts in Iraq to date are estimated at $11bn – $13bn (£6bn – £7bn), more than twice what the first Gulf war cost the US.” (Financial Times, 17 November 2004).

Despite the colossal power of US imperialism, which has a greater military firepower than the next combined nine powers, it has limits. The US was defeated in Vietnam, a country of 19 million peasants, as a result of the mutinous mood in the army and the massive opposition at home. As Trotsky once explained, American capitalism has dynamite buried in its foundations. Every adventure abroad sends shock waves through the American people, especially the Blacks, Latinos and other minorities.

Those who dreamed of an ever-growing peaceful capitalism have had their dreams shattered. During the First World War, Karl Kautsky once predicted that imperialism would overcome its contradictions and inter-imperialist antagonisms in a new phase of ultra-imperialism. “The World War between the great imperialist powers may result in a federation of the strongest, who renounce their arms race”, he said. Events, especially today show this to be false.

Rather than an epoch of peace and prosperity, mankind has entered the most stormy period in history. One crisis is rapidly followed by another. The maelstrom in Iraq is not the end, but only the beginning of unending crisis and turmoil. The Middle East is a powder keg. There is not a single stable regime in the whole of Latin America, let alone Asia and Africa. As Lenin explained, imperialism means war. Even in the upswing since 1945, there were only 19 days of peace in the world. Lenin explained that in the past epoch of relatively “peaceful” capitalism, for hundreds of millions in the ‘third world’ “that epoch was not one of ‘peace’ but of oppression, suffering and horror, which was more terrible, possibly, for appearing to be a ‘horror without end’. This epoch has gone for good, it has given way to an epoch which is relatively much more violent, spasmodic, disastrous and conflicting, an epoch which for the mass of the population is typified not so much by a ‘horror without end’ as by a ‘horrible end’.”

Overthrow capitalism

Only the overthrow of world capitalism can eliminate these horrors of war, famine and poverty. The consciousness of the working class is being transformed, as witnessed by the revolutionary developments in Latin America. The red mole of revolution, to use the words of Marx, has burrowed deep. One revolutionary victory will transform the world situation and open a new perspective for the masses worldwide. The impasse of imperialism not only means war, but also places revolution on the order of the day.